With coronavirus having unprecedented impact on economies and industries across the globe, governments have been aggressively planning the exit strategy from the lockdown imposed to curb the spread of the pandemic. In order to stabilize the economy, most countries are now beginning to relax the nationwide lockdowns and curfews in a staggered manner. People across the world are preparing for the “new normal” where ways of interaction and engagement will be completely different than the past.
Coronavirus induced nationwide lockdowns have forced people to be confined to their houses and move their social life online, resulting in a sharp rise in the consumption of online forms of media and entertainment. The segments of linear television, online gaming, VOD and OTT have witnessed an exponential increase in their usage. Other segments such as cinema halls, theme parks, music concerts, sports etc are facing the wrath of the pandemic.
Current state of the M&E industry
According to a report by PwC, the revenue for global Media & Entertainment industry is expected to be approximately 2.6 trillion by 2023.
The impact of coronavirus on Media & Entertainment industry has been quite drastic. It was estimated that the global film industry could lose more than $5 billion due to the pandemic. While on one hand Hollywood and event organizers experienced a setback, the VOD/ OTT platforms and linear TV on the other hand witnessed a surge in viewership. Due to mass population being “locked” inside their homes, as stated by Nielsen, the TV ratings were predicted to shoot up by 60%. Now the question that arises is will the trend of digital video consumption continue to grow, even when people return back to large gatherings and events? And how will that impact the strategies going forward?
According to a report published by Scroll, the coronavirus pandemic has compelled businesses to lay off their employees in certain segments such as print and television media, due to lack of advertising spending, eventually leading to loss in revenue. Many actors have succumbed to this situation and taken extreme steps like committing suicides due to no income. According to the Canadian Media Producers Association (CMPA) more than 172,000 jobs have been impacted due to the pandemic and Canadian media industry could lose up to $1.8 billion due to lockdown.
Media & entertainment industry moves towards a new normal
Some countries are planning to open up cinemas by mid-July, as reported by International Union of Cinemas (UNIC), but the decision and announcement of exact dates still depends on the situation. Even when the cinema halls and multiplexes do open, the experience of it will be a contrasting one from what we are used to know. Everyone will have to adhere to social distancing norms and authorities will face the constant pressure to sanitize entire cinema halls. The box-office could still experience losses when cinemas open – depending on the number of people permitted to attend one screening.
According to a report by World Economic Forum, the music industry has also faced disruption with the live performance category facing the most casualty. Due to the six-month long halt, the music industry is set to lose more than $10 billion worth sponsorships. If the shutdown continues, the effects will be even more devastating. With listening behaviour changing during the pandemic, the subscription-based music platforms have witnessed a 70% YOY growth in revenue during Q1 of 2020.
Trends that will shape the future of M&E market
The coronavirus onslaught has not only resulted in an increased demand for online content but also changed the way people consume that content. The industry leaders, going forward, must also re-think operational aspects of their business. With the long-term implications of the pandemic yet to surface, the following trends are likely to take the centre-stage in the post-Covid world:
Behavioural changes and new habits
In order to embrace the “new normal”, the industry will have to brainstorm on timelines, production schedule and costs, legal aspects etc. Driven by ease of access, the digital media demand will continue to grow significantly as people have started to form a habit of it. The OTT platforms and other digital channels will attract more viewers and continue to expand into new demographics.
Digital content growth trajectory will sustain
The growth trajectory of digital media will continue to accelerate at a steady pace as people are now more comfortable being online/digital. The nationwide lockdowns have infused confidence amongst the citizens across the world, to embrace the digital means of entertainment. Since online gaming has turned into ‘socializing destinations’ for majority of people, the segment has witnessed a whopping 75% boost in its consumption, according to a report by Verizon. Once the lockdown ends, the demand for the platform differentiators – “The OTT originals” is expected to increase. The OTT platforms can be seen rolling out targeted digital content for specific audiences in the near future.
Monetization challenges
Supply chain bottlenecks and scarce revenue have compelled brands to lower their advertising spend. Since, a vast number of media platforms derive a huge chunk of their revenue through advertising, the economy still being under stress poses a challenge for the businesses. The coronavirus pandemic has brought advertising to a screeching halt in various sectors such as CPG, financial services, e-commerce etc. The future monetization depends upon the recovery of these sectors so as to reap the benefits of the digital media consumption surge. Till then, the ad-spenders will continue to keep a check on their expenditures. The cancellation of NBA tournament resulted in ESPN suffering a loss of $481 million in NBA tied advertising.
Thinking of innovative ways to update content library
Due to a staggered return of workforce, the industry stakeholders will have to devise nouvelle ways to keep their content libraries updated and ensure the availability of new digital content for the viewers. Now, with social distancing norms, it will be difficult for production houses to stick to an earlier schedule as production of new content might take more time.
Leveraging technology integrations
The entire process of content creation, distribution and monetization is expected to be carried out with the help of technology. The M&E companies are expected to increase their technological dependence in order to create new revenue opportunities as well as be cost effective. Remote working solutions such as workplace collaboration tools are making it easier for the companies to conduct business. Businesses can leverage data analytics, powered by machine learning and artificial intelligence to analyse viewer behaviour and predict future industry trends.
Conclusion
Individuals across the world are consuming digital forms of entertainment more than ever. In these times of crisis, people are preferring to indulge in feel good and humorous shows while taking a break from the ongoing dark content trend. Audience insights about the changing consumer preferences can help M&E companies to churn out relevant content for the viewers. The post-Covid world will witness the Media & Entertainment industry function differently than in the past as stated by Jeff Rosica, CEO and president of Avid Technology. The dramatic effect of the pandemic is likely to ease out way faster than other industries. While the digital media mediums will continue to attract large traction, other segments Like the film industry and cinema chains will also eventually start to normalize. A survey by Perksy reveals that around 63% Gen-Z population is most likely to attend large gatherings once the lockdown is lifted. Along with that, 84% of respondents of the Perksy survey agree than future in-person events must have correct preventive measures in place.
